Travel credit cards

Meanwhile only 30 per cent of cash-carrying Brits travelling within the EU prioritise finding the most competitive exchange rates.

Better preparation can make your money go further by finding the best exchange rates around and help you avoid credit card charges abroad.

Our guide gives you a rundown of the pros and cons behind each money option available. If you’re just looking for the most essential travel money saving tips, then scroll to the bottom.

Taking cash on holiday

Many holidaymakers feel uncomfortable with the idea of taking bundles of cash with them but there are numerous advantages to at least carrying what you’ve budgeted for.

Nearly all goods and services anywhere in the world can be paid for with the local cash currency plus it’s also wise to carry some small change for getting by on public transport and purchasing water.

Airport currency exchange services rarely offer competitive rates as there really is no incentive for them to do so, especially as millions of holidaymakers regularly leave the task of changing their money to the last minute.

Allowing yourself time to shop around for the best rates really is key to getting the most out of your holiday cash.

If you have travel insurance then try to avoid taking more than you’re covered for but if you’re constantly having to withdraw cash while you’re on holiday then costs will really add up, especially if you’re using a credit card.

Credit cards

While credit cards are convenient and offer a degree of security by limiting access to the owner and offering replacements in the event of a lost or stolen card, many people are not fully aware of the costs of using one abroad and how to better avoid them.

The foreign exchange commission on credit cards, or the price you pay on top of each purchase abroad, can go as high as 2.99%, with cash ATM withdrawals charged at around 3% on top of the interest charges.

Many travel credit card providers will have introductory offers such as 0% interest on foreign purchases for the first three months and may even include a 24 hour card replacement service. If you travel frequently then it can pay to have a credit card just for foreign transactions. Read our dedicated guide if you’d like to learn all the facts about using your credit card abroad.

Travel credit cards

Debit cards

As with credit cards, using the wrong debit card abroad can prove costly, with foreign exchange commission fees of 2-3% applying on purchases and ATM withdrawals.

There may even be a penalty for using your debit card on foreign purchases over a certain number of times, so check the policy of your provider. As a general card payment rule, use the debit card for cash withdrawals and a credit card for purchases.

Travellers cheques

Travellers cheques are perhaps the safest way of carrying money abroad, but they’re not always the most convenient.

Holidaymakers may find that their travellers cheques are not accepted by all merchants and thus need to be exchanged through a bank or bureau de change, just like regular cash.

Meanwhile, some of the merchants that do accept travellers cheques may charge a foreign exchange commission fee.

The extra security provided by the fact that you must sign each cheque upon receipt and again when presenting them to merchants or banks can make all the effort worthwhile.
As long as you keep a record of purchasing the cheques, then replacing a lost or stolen cheque shouldn’t be a problem.

Prepaid cards

Pre-loading your cash onto a prepaid card before a holiday can be a sensible option to avoid overspending. Prepaid cards also provide the security benefits and convenience of a debit card by allowing you to the same level of access to online and in-store retailers.

As they’re not linked to your bank account or credit card, prepaid cards are much less open to fraudulent use than a credit or debit card, but most prepaid cards unfortunately don’t fall under Section 75 of the Consumer Credit Act.

This makes the credit card provider jointly liable if something goes wrong with a product or a service you’ve paid for costing more than £100 and less than £30,000. In the event that this happens you can’t be guaranteed protection by a prepaid card provider.

However, many of the cards come with competitive foreign exchange rates, some of which are better than the rates on the high-street.

All of this does come at a cost though, ranging from the initial costing of buying a prepaid card to commission attached to foreign transactions and loading charges.

Essential travel money saving tips

Tell your bank where you’re going – Making a purchase overseas with a credit or debit card is more likely to trigger a response in your issuer’s fraud detection system, which could result in your card being temporarily blocked. Tell your credit or debit card provider that you’re going away to avoid any lengthy overseas calls and having to explain your purchases.

Get your currency exchanged before you get to the airport – Competitive rates are almost impossible to find at the airport. Shop around to find the best deal ahead of your journey, and if you think waiting can get you a better deal at the last moment, bet wisely by purchasing at least half of the money in advance.

Avoid unnecessary Dynamic Currency Conversion fees – This service, which converts the total bill into your currency to make it easier to understand, often comes at the cost of a 2% fee on top of any transaction fees you may already be paying with your credit card. Some merchants abroad will offer this selection but they may not even ask, so make sure that you’re being charged with the local currency rather than your own.

Take note of your bank’s details and credit or debit card policy – Keep an accessible copy of your bank’s phone number in case you need to call them to block your credit or debit card or request a replacement. You may also wish to check if your bank has a branch in the country you’re visiting, which could make dealing with a loss or theft easier. Some banks will not issue replacements to a foreign country immediately so check what their policy is when it comes to getting access to your money in an emergency.

Use a debit card for cash withdrawals – If you need some extra cash then a debit card will usually work out cheaper at an ATM than a credit card will. It may work out better if you withdraw your cash in one go at the start of your holiday so you only get charged once.

Keep an emergency travellers cheque on you – Carrying a travellers cheque with you in a safe and secret place – i.e. not in your wallet – can work as a back-up if you suddenly find yourself in a situation with no cash or other access to money. As travellers cheques never expire, you can keep it with you on every trip you take as a little peace of mind.

uSwitch Limited is authorised and regulated by the Financial Conduct Authority (FCA) under firm reference number 312850. You can check this on the Financial Services Register by visiting the FCA website.